Obviousness as Fact: The Issue of Obviousness in Patent Law Should Be a Question of Fact Reviewed with Appropriate Deference

Transcription

1 Fordham Intellectual Property, Media and Entertainment Law Journal Volume 27 Volume XXVII Number 3 Article Obviousness as Fact: The Issue of Obviousness in Patent Law Should Be a Question of Fact Reviewed with Appropriate Deference Ted L. Field South Texas College of Law Houston, tfield@stcl.edu Follow this and additional works at: Part of the Intellectual Property Law Commons Recommended Citation Ted L. Field, Obviousness as Fact: The Issue of Obviousness in Patent Law Should Be a Question of Fact Reviewed with Appropriate Deference, 27 Fordham Intell. Prop. Media & Ent. L.J. 555 (2017). Available at: This Article is brought to you for free and open access by FLASH: The Fordham Law Archive of Scholarship and History. It has been accepted for inclusion in Fordham Intellectual Property, Media and Entertainment Law Journal by an authorized editor of FLASH: The Fordham Law Archive of Scholarship and History. For more information, please contact tmelnick@law.fordham.edu.

2 Obviousness as Fact: The Issue of Obviousness in Patent Law Should Be a Question of Fact Reviewed with Appropriate Deference Cover Page Footnote Professor of Law, South Texas College of Law Houston. J.D., summa cum laude, John Marshall Law School, 2002; M.S., Northwestern University, 1990; B.A., University of Illinois at Chicago, The author thanks Robert Jewett for his research assistance. The author also thanks the faculty of South Texas College of Law Houston for their helpful suggestions at a faculty scholarship workshop. Finally, the author thanks Jessica Y. Field for her encouragement and support. The author welcomes comments via at tfield@stcl.edu. This article is available in Fordham Intellectual Property, Media and Entertainment Law Journal: vol27/iss3/3

3 Obviousness as Fact: The Issue of Obviousness in Patent Law Should Be a Question of Fact Reviewed with Appropriate Deference Ted L. Field* One of the most common defenses that an accused infringer raises in a patent infringement lawsuit is that the patent claims at issue are invalid for obviousness. The question of obviousness is based on several factual determinations, and the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit should sensibly review these determinations with deference to the jury s or trial court s findings. But these courts instead treat the ultimate determination of obviousness as a question of law to be reviewed de novo. This Article challenges the correctness of this standard of review and argues that courts should treat the ultimate determination of obviousness as a question of fact reviewed with appropriate deference. The Article considers several theoretical and practical reasons that support this argument. The Article concludes: (1) based on general policy considerations concerning standards of review, obviousness should be a question of fact; (2) the precedent on which the courts have relied in determining the standard of review for obviousness does not support the conclusion that obviousness is a question of law; (3) the treatment of obviousness as a question of law is inconsistent with the Federal Circuit s treatment of analogous issues in patent law; and (4) based on an examination of recent case law, the Federal Circuit almost always treats obviousness as a de facto question of fact even though it is a * Professor of Law, South Texas College of Law Houston. J.D., summa cum laude, John Marshall Law School, 2002; M.S., Northwestern University, 1990; B.A., University of Illinois at Chicago, The author thanks Robert Jewett for his research assistance. The author also thanks the faculty of South Texas College of Law Houston for their helpful suggestions at a faculty scholarship workshop. Finally, the author thanks Jessica Y. Field for her encouragement and support. The author welcomes comments via at tfield@stcl.edu. 555

4 556 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. XXVII:555 de jure question of law. Thus, this Article concludes that the Supreme Court should hold that the ultimate issue of obviousness is properly a question of fact to be reviewed with appropriate deference. INTRODUCTION I. STANDARDS OF REVIEW AND QUESTIONS OF LAW AND FACT A. The Federal Circuit s Standards of Review De Novo Clear Error Substantial Evidence Abuse of Discretion B. How Courts Decide Whether an Issue Is a Question of Law Versus a Question of Fact Questions of Fact Questions of Law A Functional Approach to Determining Questions of Fact Versus Law II. INVALIDITY OF PATENT CLAIMS BASED UPON THE PRIOR ART A. Anticipation B. Obviousness C. The Federal Circuit Classifies the Issue of Obviousness as a Question of Law Based on Underlying Facts III. THE ULTIMATE QUESTION OF OBVIOUSNESS SHOULD PROPERLY BE A QUESTION OF FACT AND REVIEWED BY THE FEDERAL CIRCUIT WITH DEFERENCE A. The Federal Circuit s Reasoning in Panduit that the Ultimate Question of Obviousness Is a Question of Law Is Flawed B. The Supreme Court s Statement in Graham that the Ultimate Question of Obviousness Is One of Law Is Not Properly Supported by Precedent C. Treating Obviousness as a Question of Law Is Inconsistent with How the Federal Circuit Treats Anticipation and Infringement

5 2017] OBVIOUSNESS AS FACT Anticipation and Obviousness Infringement and Obviousness D. Even Though Obviousness Is Supposed to Be a Question of Law, District Courts Nonetheless Treat the Issue as a De Facto Question of Fact CONCLUSION INTRODUCTION Standards of review are crucially important in appeals. 1 And the judges of the U.S. Court of Appeals for the Federal Circuit 2 take 1 1 STEPHEN ALAN CHILDRESS & MARTHA S. DAVIS, FEDERAL STANDARDS OF REVIEW ix (3d ed. 1999) ( [S]tandards of review are the essential language of appeals. ); Kelly Kunsch, Standard of Review (State and Federal): A Primer, 18 SEATTLE U. L. REV. 11, 12 (1994) ( [A]s a concept, [the standard of review] is essential to every appellate court decision. It is to the appellate court what the burden of proof is to the trial court. ); Paul R. Michel, Appellate Advocacy One Judge s Point of View, 1 FED. CIR. B.J. 1, 2 (1991) ( Standards of review... influence the disposition of appeals far more than many advocates realize. ); Peter Nicolas, De Novo Review in Deferential Robes?: A Deconstruction of the Standard of Review of Evidentiary Errors in the Federal System, 54 SYRACUSE L. REV. 531, 531 (2004) ( In federal appellate practice, the standard of review is the name of the game. ); Amanda Peters, The Meaning, Measure, and Misuse of Standards of Review, 13 LEWIS & CLARK L. REV. 233, 234 (2009) ( Standards of review play a critical role in the appellate decision-making process.... ); cf. FED. R. APP. P. 28(a)(8)(B) (requiring the appellant s brief to contain for each issue, a concise statement of the applicable standard of review ). Indeed, a standard of review is often outcome determinative, in the sense that the difference between victory and defeat on appeal can turn on whether the standard by which the appellate court reviews the trial court s decision on an issue is plenary or deferential. Nicolas, supra. 2 The U.S. Court of Appeals for the Federal Circuit was created in 1982 and has exclusive jurisdiction over appeals of patent decisions of the district courts. Ted L. Field, Improving the Federal Circuit s Approach to Choice of Law for Procedural Matters in Patent Cases, 16 GEO. MASON L. REV. 643, 643 (2009). One of Congress s important goals in taking patent appeals out of the regional circuits and placing them in the newly created Federal Circuit was to bring national uniformity to patent law. at The Federal Circuit also hears appeals from denials of patent grants by the U.S. Patent and Trademark Office. at 643 n.2 (citing 28 U.S.C. 1295(a)(4)(A) (2000)). Moreover, [p]artly out of recognition of the dangers of specialization, [Congress] supplemented [the Federal Circuit s] jurisdiction with adjudicatory authority in such diverse areas as trademark, tariff and customs law, technology transfer regulations, and government contract and labor disputes. (first and third alterations in original) (quoting Rochelle Cooper Dreyfuss, The Federal Circuit: A Case Study in Specialized Courts, 64 N.Y.U. L. REV. 1, 4 (1989)).

6 558 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. XXVII:555 standards of review seriously. 3 For example, according to retired Judge Paul R. Michel 4 of the Federal Circuit, [s]tandards of review... influence the disposition of appeals far more than many advocates realize. 5 Judge Michel further characterized a clear statement [in a brief as to] why the standard of review is met or is not met as a likely pivot point in deciding the appeal. 6 Judge Michel has noted: [I]n all appeals, the controlling question for us is always the same: Did the trial court commit reversible error? Not just any error, but... most of all, error that meets the relevant standards of review.... And always, we view the alleged error through the lens of the standard of review. 7 A standard of review is the criterion by which the decision of a lower tribunal will be measured by a higher tribunal to determine its correctness or propriety. 8 Thus, a standard of review defines the amount of deference that a reviewing court gives to a lower tribunal s decision. 9 And a standard of review defines [w]hat is ne- 3 See Michel, supra note 1, at 2 (describing the importance of standards of review to the decision-making process of the Federal Circuit); see also Kevin Casey et al., Standards of Appellate Review in the Federal Circuit: Substance and Semantics, 11 FED. CIR. B.J. 279, 280 (2002) ( [S]tandards of review involve complex and subtle questions of both law and tactics, which often impact the appeal more than the facts and the substantive law issues upon which advocates spend so much time and effort. ); Charles W. Shifley, The Three Stages to Successful Appellate Advocacy Before the Federal Circuit, 1 J. MARSHALL REV. INTELL. PROP. L. 238, 244 (2002) ( No appeal will have success unless the standard(s) of review [are] identified and appreciated. ). 4 Paul Michel served as a judge on the Federal Circuit from 1988 through History of the Federal Judiciary: Biographical Directory of Federal Judges, FED. JUD. CTR., [ perma.cc/6cdn-7c9d] (last visited Feb. 24, 2017). He served as Chief Judge from 2004 through 2010, and then retired from the court. 5 Michel, supra note 1, at 2. 6 at 6. 7 at 2. 8 Kunsch, supra note 1, at 15; see also Richard H.W. Maloy, Standards of Review Just a Tip of the Icicle, 77 U. DET. MERCY L. REV. 603, 604 (2000) (defining standard of review as the limits of review, or the extent to which, and the manner by which, a court of review will scrutinize the findings of fact, conclusions of law, or rulings of a trial court ). 9 CHILDRESS & DAVIS, supra note 1, 1.01, at 1-2; Kunsch, supra note 1, at 14.

7 2017] OBVIOUSNESS AS FACT 559 cessary to overturn the decision being appealed. 10 Standards of review serve other important purposes too: they enhance judicial economy, standardize the appellate process, and give the parties in a lawsuit an idea of their chance of success on appeal. 11 But there is at least one more important function of standards of review: they balance the power among the courts. 12 Indeed, the fundamental notion behind a standard of review is that of defining the relationship and power shared among judicial bodies. 13 Standards of review that allow an appellate court to give less deference to a decision of a trial court necessarily give more power to the appellate court relative to the trial court than standards of review that are more deferential. Thus, the way in which the appellate court establishes standards of review for various issues is related to how much power the court has. Significantly, the U.S. Supreme Court has recently recognized the importance of the standards of review that the Federal Circuit applies in patent cases by altering the Federal Circuit s standards of review in two cases since Commentators have accused the Federal Circuit of generally exercising too much power relative to that of the district courts in patent cases. 15 One particular way in which the Federal Circuit has 10 Kunsch, supra note 1, at Peters, supra note 1, at CHILDRESS & DAVIS, supra note 1, 1.01, at See Teva Pharms. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 835 (2015) (holding that the clearly erroneous standard applies for subsidiary facts in claim construction instead of the de novo standard); Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1749 (2014) (holding that the abuse of discretion standard applies for the determination of whether a case is exceptional in awarding attorney fees instead of the de novo standard). 15 See, e.g., Ted L. Field, Hyperactive Judges: An Empirical Study of Judge-Dependent Judicial Hyperactivity in the Federal Circuit, 38 VT. L. REV. 625, (2014) [hereinafter Field, Hyperactive Judges] (describing criticisms by commentators of the Federal Circuit s judicial hyperactivity ); Ted L. Field, Judicial Hyperactivity in the Federal Circuit: An Empirical Study, 46 U.S.F. L. REV. 721, (2012) [hereinafter Field, Judicial Hyperactivity] (same); Paul R. Gugliuzza, The Federal Circuit as a Federal Court, 54 WM. & MARY L. REV. 1791, (2013) (describing how the Federal Circuit has enhanced its power in patent law relative to the power of the district courts); Mark A. Lemley, Why Do Juries Decide If Patents Are Valid?, 99 VA. L. REV. 1673, 1735 n.279 (2013) ( The Federal Circuit has been criticized for usurping the district court s fact-

8 560 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. XXVII:555 been accused of exercising such excessive power is by applying standards of review that are not sufficiently deferential. 16 In particular, many commentators have criticized the court s longtime practice of treating the issue of claim construction 17 as a pure question of law and reviewing decisions on claim construction without deference. 18 Indeed, the Federal Circuit originally decided en banc that finding role. (citing Field, Judicial Hyperactivity, supra, at 723; William C. Rooklidge & Matthew F. Weil, Judicial Hyperactivity: The Federal Circuit s Discomfort with Its Appellate Role, 15 BERKELEY TECH. L.J. 725, 726 (2000))); Arti K. Rai, Specialized Trial Courts: Concentrating Expertise on Fact, 17 BERKELEY TECH. L.J. 877, 883 (2002) ( Ignoring conventional allocation-of-power principles that give trial courts primary authority over factual questions, the Federal Circuit has asserted power over fact. ); Rooklidge & Weil, supra (describing criticisms by commentators of the Federal Circuit s judicial hyperactivity ); John R. Thomas, On Preparatory Texts and Proprietary Technologies: The Place of Prosecution Histories in Patent Claim Interpretation, 47 UCLA L. REV. 183, (1999) ( Seeking to expand its ability to regulate patent infringement disputes, the Federal Circuit sought an interpretive strategy that would provide it with unrestrained powers of review. ). 16 Gugliuzza, supra note 15, at 1831 ( [T]he court has shaped patent law s standards of appellate review to give itself plenary power to resolve many important substantive [patent-law] issues....in patent cases, the Federal Circuit has cast many important issues as questions of law, rather than questions of fact, enhancing the court s authority over district courts. ). 17 The Patent Act requires that the specification of every patent must conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention. 35 U.S.C. 112(b) (2012). A patent claim is a single-sentence definition of the scope of the patent owner s property right that is, her right to exclude others from making, using, selling, offering to sell, or importing the invention, in this country, during the term of the patent. JANICE M. MUELLER, PATENT LAW 78 (4th ed. 2013). The claim describes the metes and bounds of the invention. Claim construction or claim interpretation is the process by which a court interprets the meaning of the claim terms in a particular patent. See id. at Claim construction can be the single most important event in the course of a patent litigation. at 447 (quoting Retractable Techs., Inc. v. Becton, Dickinson & Co., 659 F.3d 1369, 1370 (Fed. Cir. 2011) (Moore, J., dissenting from denial of rehearing en banc)). 18 See, e.g., Christian A. Chu, Empirical Analysis of the Federal Circuit s Claim Construction Trends, 16 BERKELEY TECH. L.J. 1075, 1113 (2001) (linking the Federal Circuit s high reversal rate with the de novo standard of review for claim construction decisions); Field, Judicial Hyperactivity, supra note 15, at 733 ( Commentators have accused the Federal Circuit of overstepping its proper appellate role by reviewing claim construction decisions de novo instead of giving deference to the claim construction decisions of the district courts. ); Rai, supra note 15, at 883 ( Ignoring conventional allocation-of-power principles that give trial courts primary authority over factual questions, the Federal Circuit has asserted power over fact. In the context of claim construction, it has done so simply by declaring claim construction to be a pure question

9 2017] OBVIOUSNESS AS FACT 561 claim construction was a pure question of law to be reviewed de novo in the 1998 case Cybor Corp. v. FAS Technologies, Inc. 19 And despite criticism of this decision, 20 the Federal Circuit in 2014 reaffirmed the Cybor Corp. standard en banc, holding that it would continue to review claim-construction decisions with no deference. 21 But in the 2015 case Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 22 the Supreme Court, recognizing the importance of this issue, 23 overturned the Federal Circuit s practice of reviewing claimconstruction decisions with no deference. 24 In Teva, the Court began by observing that Federal Rule of Civil Procedure 52(a) 25 requires all courts of appeals to review factual determinations made by judges using the clearly erroneous standard. 26 The Court reasoned that no exception to this rule should apply for the review of of law subject to de novo review. ); Rooklidge & Weil, supra note 15, at 748 ( [B]y confirming that claim construction is an issue of law for the court to decide, the Supreme Court s ruling in Markman v. Westview Instruments plainly hastened the Federal Circuit s move toward greater involvement as an appellate tribunal in the sorts of de novo review that have tempted the court to take on the role of advocate. ); Thomas Chen, Note, Patent Claim Construction: An Appeal for Chevron Deference, 94 VA. L. REV. 1165, 1180 (2008) ( [A]ppellate review of claim construction would greatly benefit from a more deferential approach that simply assesses whether the district court derived a reasonable claim interpretation, in place of the currently inefficient pursuit of a single best answer. ) F.3d 1448, 1456 (Fed. Cir. 1998) (en banc). 20 See Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp., 744 F.3d 1272, 1296 (Fed. Cir. 2014) (en banc) (O Malley, J., dissenting) ( District judges, both parties in this case, and the majority of intellectual property lawyers and academics around the country will no doubt be surprised by today s majority opinion [reaffirming Cybor] and for good reason. ). 21 at 1292 (majority opinion) S. Ct. 831 (2015). 23 at 836 (noting that the Court believe[s] it important to clarify the standard of review that the Federal Circuit must apply in reviewing claim construction decisions). 24 at 835 (holding that the Federal Circuit must apply a clear error, not a de novo, standard of review when it reviews the factual underpinnings of a claim construction decision). The Court s holding did not come as a surprise to commentators. See, e.g., Dennis Crouch, Supreme Court to Consider De Novo Review of Claim Construction, PATENTLY-O (Mar. 31, 2014), [ ( I ll speculate here that the result will be a unanimous rejection of the Federal Circuit s no deference policy. ). 25 For a discussion of how the Federal Circuit applies rule 52(a) in the context of reviewing an obviousness determination, see infra text accompanying notes Teva, 135 S. Ct. at 836.

10 562 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. XXVII:555 factual underpinnings in claim-construction decisions. 27 The Court then noted that both precedent and practical considerations favor clear error review. 28 The Court rejected arguments to the contrary 29 and held that the Federal Circuit must review the factual underpinnings involved in a claim-construction decision for clear error. 30 The Court thus effectively overruled the Federal Circuit s decisions in Cybor Corp. v. FAS Technologies, Inc. 31 and Lighting Ballast Control LLC v. Philips Electronics North American Corp. 32 to treat claim construction as a pure question of law to be reviewed de novo. Further underscoring the importance of standards of review in patent cases, the Supreme Court in 2014 overruled the Federal Circuit s practice of using a non-deferential standard of review in an area of patent law involving attorney fees. Under 285 of the Patent Act, a party is entitled to an award of attorney fees if the case is exceptional. 33 In Highmark Inc. v. Allcare Health Management System, Inc., 34 the Court considered the propriety of the Federal Circuit s practice of reviewing a district court s determination as to whether a case is exceptional 35 without deference. 36 The Court considered the text of the statute and held that it em- 27 at 837. The Court implicitly recognized that even if convincing ground[s] for an exception existed, the Court likely lacked the power to create such an exception to a Federal Rule of Civil Procedure. See id. ( Even if exceptions to the Rule were permissible, we cannot find any convincing ground for creating an exception to that Rule here. ). In a dissent authored by Justice Thomas and joined by Justice Alito, Justice Thomas disagreed that rule 52(a) should apply to the review of claim-construction decisions. at (Thomas, J., dissenting). In his dissent, Justice Thomas reasoned that any apparent subsidiary evidentiary findings should properly subsumed into the overall question of law presented by a claim-construction decision. at at (majority opinion). 29 at at F.3d 1448 (Fed. Cir. 1998) (en banc) F.3d 1272 (Fed. Cir. 2014) (en banc). 33 Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, (2014) (citing 35 U.S.C. 285 (2012)) S. Ct (2014). 35 As the Supreme Court held in Octane Fitness in 2015, an exceptional case is simply one that stands out from others with respect to the substantive strength of a party s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. 134 S. Ct. at Highmark, 134 S. Ct. at

11 2017] OBVIOUSNESS AS FACT 563 phasizes the fact that the determination [of whether a case is exceptional] is for the district court, which suggests some deference to the district court upon appeal. 37 The Court also noted that as a matter of the sound administration of justice, the district court is better positioned to decide whether a case is exceptional because it lives with the case over a prolonged period of time. 38 Finally, the court reasoned that the question is multifarious and novel, not susceptible to useful generalization of the sort that de novo review provides, and likely to profit from the experience that an abuse-ofdiscretion rule will permit to develop. 39 Thus, the Court held that the Federal Circuit must abandon its practice of reviewing this issue de novo and instead apply an abuse-of-discretion standard in reviewing all aspects of a district court s... determination as to whether a case is exceptional. 40 The importance of standards of review in patent litigation, as shown by the Supreme Court s recent attention to standards of review applied by Federal Circuit, gives rise to this question: In what other areas of patent law does the Federal Circuit currently apply non-deferential review where instead the court should really be applying a deferential standard of review? This Article explores an answer to this question for one particular area of the law: invalidity 41 due to obviousness. 42 The Supreme Court and Federal Circuit currently review the ultimate decision that a patent is or is not invalid due to obviousness with no deference. 43 This Article pro- 37 at 1748 (quoting Pierce v. Underwood, 487 U.S. 552, 559 (1988)). 38 (citation omitted) (quoting Pierce, 487 U.S. at ). 39 at (quoting Pierce, 487 U.S. at 562) In a patent infringement lawsuit, an accused infringer can raise the affirmative defense of invalidity. See 35 U.S.C. 282(b)(2) (3) (2012). In bringing an invalidity defense, the accused infringer asserts that one or more of the asserted patent claims are invalid for failure to satisfy any of the patentability requirements, such as patent-eligible subject matter, utility, novelty, and nonobviousness. MUELLER, supra note 17, at 582. And once a court declares that a patent claim is invalid, the patent owner is precluded from asserting that claim against any other infringer. at 581 (citing Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313 (1971)). Thus, the effect of an invalidity determination is that the claim is dead and cannot be resuscitated. 42 For a discussion of the issue of invalidity due to obviousness, see infra Section I.B. 43 Graham v. John Deere Co., 383 U.S. 1, 17 (1966); Panduit Corp. v. Dennison Mfg. Co., 810 F.2d 1561, 1566 (Fed. Cir. 1987). For a discussion of the Federal Circuit s

12 564 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. XXVII:555 poses that the obviousness determination should be reviewed as a question of fact 44 thus, for clear error 45 in a bench trial, 46 and for substantial evidence 47 in a jury trial. 48 The most commonly litigated invalidity defense in patentinfringement lawsuits is obviousness. 49 The obviousness determination is governed by 103 of the Patent Act, 50 under which a patent claim is invalid if the differences between the claimed invention and the prior art 51 are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. 52 The Supreme Court has held that the obviousness analysis involves four factual determinations, known as the Graham factors : (1) level of ordinary skill in the art; (2) scope and content of the prior art; (3) differences between the claimed invention and the prior art; and (4) secondary reasoning behind its holding that obviousness is a question of law, reviewed de novo, see infra Section I.C. 44 This Article does not analyze the related, though different, issue of whether the question of obviousness is more properly a decision to be made by the court and never a jury. For a recent and thorough treatment of this separate issue, see generally Lemley, supra note See FED. R. CIV. P. 52(a) (requiring a clearly erroneous standard of review with respect to the findings of fact in a bench trial). For a discussion of the clearly erroneous standard, see infra Section I.A Galderma Labs., L.P. v. Tolmar, Inc., 737 F.3d 731, 736 (Fed. Cir. 2013). 47 See Kunsch, supra note 1, at 24 ( Facts found by a jury are reviewed with the common law substantial evidence test. (citing Glasser v. United States, 315 U.S. 60, 80 (1942))). For a discussion of the substantial-evidence standard, see infra Section I.A Sanofi-Aventis Deutschland GmbH v. Glenmark Pharm. Inc., USA, 748 F.3d 1354, 1358 (Fed. Cir. 2014). 49 See Matthew Beutler, How a Comparative Analysis of Federal Circuit Standards of Review Supports Limiting the Role of Juries in Determinations of Obviousness, 92 J. PAT. & TRADEMARK OFF. SOC Y 451, 453 (2010) ( [T]he question of obviousness is so frequently found at the center of disputes concerning patents in both pre-issuance patent procurement as well as post-issuance patent enforcement. ). For a more detailed discussion of the obviousness defense, see infra Section I.B U.S.C. 103 (2012). 51 [P]rior art can be understood at a very basic level as the legally available technology and information with which the claimed invention will be compared in order to determine whether that invention is patentable. MUELLER, supra note 17, at 284. The exact requirements for a particular piece of technology or information to be considered prior art are defined by the statute. See 35 U.S.C. 102 (2012)

13 2017] OBVIOUSNESS AS FACT 565 considerations (i.e., objective indicia of nonobviousness). 53 After making findings as to these factors, the decision maker must then determine whether the claimed invention would have been obvious to a person having ordinary skill in the art before the effective filing date. 54 Importantly, the obviousness determination is objective because it requires analysis of obviousness with respect to a hypothetical third party the hypothetical person having ordinary skill in the art to which the claimed invention pertains. 55 Although the Supreme Court and Federal Circuit classify this ultimate determination of obviousness as one of law reviewed without deference, 56 this Article proposes that it should properly be classified as one of fact and reviewed with deference for the following reasons: The Federal Circuit s reasoning that the ultimate question of obviousness is really a question of law rather than a question of fact is flawed; 57 The Supreme Court s statement that the ultimate question of obviousness is one of law was never properly supported by precedent; 58 Treating obviousness as a question of law is inconsistent with how the Federal Circuit treats other analogous patent-law issues, such as anticipation and infringement under the doctrine of equivalents; 59 and Even though under current law obviousness is supposed to be a question of law, district courts nonetheless treat the issue as a de facto question of fact, without the objection of the Federal Circuit MUELLER, supra note 17, at See Graham v. John Deere Co., 383 U.S. 1, 17 (1966) ; see also KSR Int l Co. v. Teleflex Inc., 550 U.S. 398, 406 (2007). 56 Graham, 383 U.S. at 17; Panduit Corp. v. Dennison Mfg. Co., 810 F.2d 1561, 1566 (Fed. Cir. 1987). 57 For a discussion of this issue, see infra Section I.A. 58 For a discussion of this issue, see infra Section I.B. 59 For a discussion of this issue, see infra Section I.C. 60 For a discussion of this issue, see infra Section I.D.

14 566 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. XXVII:555 For these reasons, in an appropriate case, the Supreme Court should hold that the ultimate determination of obviousness is a question of fact to be reviewed as such. Part I begins with a description of standards of review and the difference between questions of law and fact. Part II discusses the two invalidity defenses based on the prior art anticipation and obviousness. Part III then describes in detail why the ultimate question of obviousness should properly be a question of fact and reviewed by the Federal Circuit with deference. I. STANDARDS OF REVIEW AND QUESTIONS OF LAW AND FACT This Part provides background information regarding standards of review and questions of law and fact. Section I.A discusses the different standards of review that are applied by the Federal Circuit. Section I.B discusses how reviewing courts in general decide whether an issue is a question of law versus a questions of fact. A. The Federal Circuit s Standards of Review A standard of review prescribes the degree of deference given by the reviewing court to the actions or decisions under review. 61 Further, it is the criterion by which the decision of a lower tribunal will be measured by a higher tribunal to determine its correctness or propriety. 62 In essence, a standard of review defines [w]hat is necessary to overturn the decision being appealed. 63 It is perhaps surprisingly a relatively new concept in appellate jurisprudence. 64 But the standard of review has become vitally important in appellate decision-making at the Federal Circuit. 65 The 61 CHILDRESS & DAVIS, supra note 1, 1.01, at Kunsch, supra note 1, at at Peters, supra note 1, at Indeed, [t]hough the language for modern-day standards of review can be traced to early American opinions, the concept of standards of review was not firmly rooted in opinions until the latter part of the twentieth century. at See Michel, supra note 1, at 2 (describing the importance of standards of review to the decision-making process of the Federal Circuit); see also Casey et al., supra note 3, at 280 ( [S]tandards of review involve complex and subtle questions of both law and tactics,

15 2017] OBVIOUSNESS AS FACT 567 Federal Circuit uses four basic standards in reviewing district-court decisions: (1) de novo; (2) clear error; (3) substantial evidence; and (4) abuse of discretion. 66 The following sections discuss each of these standards in turn. 1. De Novo The least deferential standard used by the Federal Circuit is the de novo standard. 67 Where the court reviews an issue under the de novo standard, it gives the trial tribunal little, if any, deference. 68 Indeed, the decision under review receives little or no presumption of correctness. 69 In applying the de novo standard, the court must exercise its independent judgment on the evidence of record and [weigh] it as a trial court would. 70 Although the de novo standard does not require the court to give any deference to the decision it is reviewing, nonetheless, the court is not... rewhich often impact the appeal more than the facts and the substantive law issues upon which advocates spend so much time and effort. ); Shifley, supra note 3, at 244 ( No appeal will have success unless the standard(s) of review [are] identified and appreciated. ); cf. Bryan Adamson, All Facts Are Not Created Equal, 13 TEMP. POL. & C.R. L. REV. 629, 629 (2004) ( It is no exaggeration to say that classifying a trial court s findings as findings of fact, findings of law, or mixed questions of law and fact can dictate the outcome on appeal. ). 66 Casey et al., supra note 3, at Where reviewing cases from various agency tribunals as opposed to district courts the Federal Circuit uses standards of review in addition to these four, such as the arbitrary or capricious standard. at 287. But this Article focuses exclusively on the Federal Circuit s review of patent decisions made by district courts, not on its review of agency determinations. 67 The Federal Circuit sometimes uses the term without deference for the de novo standard of review. See, e.g., Synqor, Inc. v. Artesyn Techs., Inc., 709 F.3d 1365, 1373 (Fed. Cir. 2013) ( On the issue of obviousness, this court reviews... the ultimate conclusion of obviousness without deference. ). The court also sometimes refers to de novo review as plenary review. See, e.g., Net MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359, 1365 (Fed. Cir. 2008) ( Indefiniteness under 35 U.S.C. 112, 2 is also a question of law subject to plenary review. ). 68 Casey et al., supra note 3, at 285; see also Kunsch, supra note 1, at 37 (defining de novo review as where a reviewing court makes an original appraisal of all the evidence to decide whether or not it believes [the conclusions of the trial court] (alteration in original) (quoting Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485, 514 n.31 (1984))) Casey et al., supra note 3, at 285. SSIH Equip. S.A. v. U.S. Int l Trade Comm n, 718 F.2d 365, 381 (Fed. Cir. 1983).

16 568 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. XXVII:555 quired to ignore the decision below. 71 The court applies the de novo standard to issues that the court defines as purely legal Clear Error In contrast to the de novo standard, the Federal Circuit must give at least some deference to a district-court judge s factual findings in a review under the clearly erroneous standard. 73 This standard is required by Federal Rule of Civil Procedure 52(a), which provides: Findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous The Supreme Court has defined a finding as clearly erroneous where although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. 75 The Seventh Circuit has put a colorful gloss on this definition, which emphasizes the great degree of deference this standard requires: To be clearly erroneous, a decision must strike us as more than just maybe or probably wrong; it must, as one member of this court recently stated during oral argument, strike us as wrong with the force of a five-week-old, unrefrigerated dead fish. 76 Although it is deferential, the clearly erroneous standard is nonetheless lenient. 77 The issue under the clearly erroneous standard is not whether a particular finding is actually correct in the opinion of the Federal Circuit; instead, the issue is whether the finding was clearly wrong. 78 Thus, in some cases, the clearly er- 71 Thus, under the de novo standard, although the court in theory reviews a decision without any deference, [i]n practice... the trial tribunal s decision will at least have a subtle effect. Casey et al., supra note 3, at 290. Indeed, the court may be influenced by the persuasive force of a well-written trial tribunal opinion, which reasons forcefully and examines deftly the law and precedent even under the de novo standard. 72 Casey et al., supra note 3, at at FED. R. CIV. P. 52(a)(6). 75 United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948). 76 Parts & Elec. Motors, Inc. v. Sterling Elec., Inc., 866 F.2d 228, 233 (7th Cir. 1988); Casey et al., supra note 3, at 299 n.81 (quoting Parts & Elec. Motors, 866 F.2d at 233). 77 Casey et al., supra note 3, at

17 2017] OBVIOUSNESS AS FACT 569 roneous standard binds the Federal Circuit to affirm a finding of fact even if it would also have affirmed [a] contrary finding[]. 79 An important policy rationale for requiring that a reviewing court defer to a district court s factual findings is that the districtcourt judge is in a better position to make findings on the issue in question. 80 Indeed, as one commentator has explained: [A district court judge is] present throughout the entire course of the trial. [The judge] can observe first-hand the demeanor of each witness and thereby determine each witness credibility. [The judge] spend[s] more time with the facts and parties of the case so [the judge] generally [has] a better understanding of the context within which an issue arises. 81 Other important policy rationales for deference relate to the judicial system and what such deference does for the system itself. 82 One important such institutional rationale is that of finality: The more deference given to the decision of the lower tribunal, the less likely the losing party is to appeal that decision. 83 This rationale also leads to the idea that such finality will reduce court congestion because, [i]f fewer parties appeal, there will be fewer Kunsch, supra note 1, at 20. Indeed, Federal Rule of Civil Procedure 52(a)(6) itself recognizes this rationale in its text: [T]he reviewing court must give due regard to the trial court s opportunity to judge the witnesses credibility. FED. R. CIV. P. 52(a)(6). 81 Kunsch, supra note 1, at 20. Although the district court judge s ability to observe the demeanor of witnesses is an important justification for deference under the clearly erroneous standard, Rule 52(a) nonetheless requires a reviewing court to review all of a district court s factual findings with deference even if those findings are based on documentary evidence rather than oral testimony. FED. R. CIV. P. 52(a)(6) ( Findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous.... (emphasis added)). Despite this requirement, a court of appeals may more easily find clear error when it has the same documents for decision as were available to the district court. Casey et al., supra note 3, at 300. But the Supreme Court has recognized that greater deference is due under the clearly erroneous standard to [the district court s] findings... based upon the credibility of witnesses. (citing Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573 (1985); Bose Corp. v. Consumers Union, 466 U.S. 485, 500 (1984)). 82 Kunsch, supra note 1, at

18 570 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. XXVII:555 appellate cases. 84 Finally, deference to the district court s factual decisions helps maintain the public s confidence in district-court judges; if the courts of appeals reversal rates were greater due to a lack of deference to district courts findings, the public s confidence may be reduced. 85 Additionally, the assignment of the amount of deference that a court of appeals must give to a district court s findings balance[s] the power among the courts. 86 Indeed, the fundamental notion behind a standard of review is that of defining the relationship and power shared among judicial bodies. 87 Standards of review that allow an appellate court to give less deference to a decision of a trial court necessarily give more power to the appellate court relative to the trial court than standards of review that are more deferential. Thus, the way in which the appellate court establishes how much deference to give the district court for various issues is related to the amount of power the court has. 3. Substantial Evidence Whereas the Federal Circuit uses the clear-error standard to review a district-court judge s factual findings, the court uses the substantial-evidence standard to review a jury s factual findings. 88 The substantial-evidence standard is an even more deferential standard than clear error, based on the policy judgment that bench trial findings are less sacrosanct on review than are jury verdicts. 89 This result flows from the Seventh Amendment. 90 In addition to providing the right to a jury trial in civil litigation, the Seventh Amendment also limits appellate review of a jury s factual findings: [N]o fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the 84 at Peters, supra note 1, at CHILDRESS & DAVIS, supra note 1, 1.01, at Casey et al., supra note 3, at 307; see also, e.g., Kinetic Concepts, Inc. v. Smith & Nephew, Inc., 688 F.3d 1342, 1360 (Fed. Cir. 2012). 89 Casey et al., supra note 3, at U.S. CONST. amend. VII.

19 2017] OBVIOUSNESS AS FACT 571 common law. 91 Jury trials are very common in patent litigation today, 92 and in a jury trial, the jury usually decides most of the important issues. 93 Under the substantial-evidence standard, a reviewing court must affirm a jury s factual finding as long as it is supported by substantial evidence. 94 The Supreme Court has defined substantial evidence as follows: Substantial evidence is more than a scintilla, and must do more than create a suspicion of the existence of the fact to be established. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, and it must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury Abuse of Discretion Abuse of discretion is the most deferential standard. 96 A reviewing court uses this highly deferential standard for the review of issues where the district court has a range of choices in deciding an issue. 97 Under the abuse-of-discretion standard, a reviewing court will not disturb [the district court s] choice as long as the choice is within the predetermined range, and is not influenced by any mistake of law or [sufficiently] erroneous findings of fact ; see also Casey et al., supra note 3, at 308 ( Appellate challenges to jury findings of fact rarely succeed, because the Seventh Amendment proscribes review of such findings even more than Rule 52 restricts review of trial court findings of fact. ). 92 See Lemley, supra note 15, at 1674 ( The jury trial is a fixture of modern patent litigation. ). Professor Lemley determined that, of all the U.S. patent trials between 2000 and June 2011, almost seventy-five percent of them were jury trials rather than bench trials. at 1674 n.1 (citing Mark A. Lemley et al., Rush to Judgment? Trial Length and Outcomes in Patent Cases, 41 AIPLA Q.J. 169, 172, 174 (2013)). 93 at JAMES W. MOORE ET. AL., MOORE S FEDERAL PRACTICE: CIVIL (3d ed. 2016); Peters, supra note 1, at NLRB v. Columbian Enameling & Stamping Co., 306 U.S. 292, 300 (1939) (citation omitted) (quoting Consol. Edison Co. of N.Y. v. NLRB, 305 U.S. 197, 229 (1938)). 96 Peters, supra note 1, at Casey et al., supra note 3, at 310.

20 572 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. XXVII:555 The Federal Circuit specifically defines abuse of discretion as where a decision was based on clearly erroneous findings of fact, an incorrect conclusion of law, or a clear error of judgment. 99 The Federal Circuit applies the abuse-of-discretion standard to equitable determinations, such as injunctions, inequitable conduct, enhanced damages, and attorney fees. 100 The court also applies the abuse-of-discretion standard to discretionary matter[s] involving the admission of evidence, discovery, or other trial management issues. 101 Indeed, because this standard is so highly deferential, the Federal Circuit rarely reverses such decisions. 102 B. How Courts Decide Whether an Issue Is a Question of Law Versus a Question of Fact Courts admittedly have difficulty in deciding whether an issue is properly a question of law as opposed to a question of fact. 103 But the resolution of this question is important because to determine what level of appellate deference, if any, is appropriate for a particular issue, a court must decide whether the issue should be consi- 99 E.g., Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 37 (Fed. Cir. 2012) (citing Spectralytics, Inc. v. Cordis Corp., 649 F.3d 1336, 1347 (Fed. Cir. 2011)). 100 Casey et al., supra note 3, at 310; see also Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1749 (2014) (holding that the abuse of discretion standard applies to the Federal Circuit s review of a decision as to whether a case is exceptional to support an award of attorney fees). 101 Casey et al., supra note 3, at 310. Technically, for procedural rather than substantive issues such as these, the Federal Circuit applies the standard of review as indicated by the precedent of the court of appeals of the regional circuit from within which the district court was located, rather than applying its own determination as to which standard to apply. See Field, supra note 2, at 645 (citing Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1359 (Fed. Cir. 1999) (en banc in relevant part)). But, for issues involving evidence, discovery, or trial management, the circuit courts of appeals uniformly apply the abuse of discretion standard. See CHILDRESS & DAVIS, supra note 1, 4.01, at Casey et al., supra note 3, at See Miller v. Fenton, 474 U.S. 104, 113 (1985) ( [T]he appropriate methodology for distinguishing questions of fact from questions of law has been, to say the least, elusive. ); Pullman-Standard v. Swint, 456 U.S. 273, 288 (1982) ( The Court has previously noted the vexing nature of the distinction between questions of fact and questions of law. (citing Baumgartner v. United States, 322 U.S. 665, 671 (1944))); Nathan Isaacs, The Law and the Facts, 22 COLUM. L. REV. 1, 1 (1922) ( The delusive simplicity of the distinction between questions of law and questions of fact has been found a will-of-the-wisp by travelers approaching it from several directions. ).

21 2017] OBVIOUSNESS AS FACT 573 dered a question of law or a question of fact. 104 Although some issues are easy to classify as either questions of law or fact, 105 other issues present greater difficulty. 106 Indeed, it is often more realistic to think of a particular issue as lying on a continuum between law and fact rather than as purely law or purely fact. 107 Although there is no set rule for determining where on the spectrum a particular issue falls between law and fact, 108 the Supreme Court has established, and commentators have proposed, guidelines for doing so. 109 Section I.B.1 begins by discussing questions of fact. Next, Section I.B.2 discusses questions of law. Finally, Section I.B.3 discusses how many courts use a functional approach to determining questions of fact versus questions of law. 104 See, e.g., Teva Pharms. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, (2015) (Thomas, J., dissenting) (reasoning that the Court must consider whether claim construction is a question of law or fact to determine whether Federal Rule of Civil Procedure 52(a)(6) requires review of subsidiary facts under a clearly erroneous standard); CHILDRESS & DAVIS, supra note 1, 2.21, at ( Federal Rule of Civil Procedure 52 does not draw the lines demarking fact, protected by the rule on appeal, and legal or mixed law-fact questions, which are generally freely reviewed except where they are controlled by underlying facts. ); Casey et al., supra note 3, at 316 ( [T]he type of issue under view, law versus fact, helps to determine the standard of review. ); Steven Alan Childress, Clearly Erroneous : Judicial Review over District Courts in the Eighth Circuit and Beyond, 51 MO. L. REV. 93, 98 (1986) ( The law-fact distinction... is crucial because the clearly erroneous rule protects factfindings from summary reversal but does not apply to errors of law, reviewed de novo. ); Kunsch, supra note 1, at 27 28; Robert L. Stern, Review of Findings of Administrators, Judges and Juries: A Comparative Analysis, 58 HARV. L. REV. 70, (1944) ( More troublesome has been the problem as to just what questions are to be treated as fact or as law. ). 105 Ray A. Brown, Fact and Law in Judicial Review, 56 HARV. L. REV. 899, 900 (1943) ( [E]ven the most obstinate realist could distinguish in kind between the question whether the Rule against Perpetuities may operate to render void a grantor s power of termination for breach of condition subsequent, and the question whether it was Tom Jones or Bob Smith who drove the automobile that ran over Billy Brown. ). 106 Casey et al., supra note 3, at 317 ( The distinction between law and fact for purposes of identifying standard of review is often a difficult line to draw. ). 107 at 318; accord Kunsch, supra note 1, at Miller, 474 U.S. at 113; Casey et al., supra note 3, at 318; Kunsch, supra note 1, at See, e.g., Teva, 135 S. Ct. at 845 (Thomas, J., dissenting); Miller, 474 U.S. at ; Bose Corp. v. Consumers Union, 466 U.S. 485, (1984); Pullman-Standard v. Swint, 456 U.S. 273, (1982); Baumgartner v. United States, 322 U.S. 665, (1944); Childress, supra note 104, at , ; Kunsch, supra note 1, at 21 23; Stern, supra note 104, at